12 Steps to Manual Payroll in QuickBooks

Manual payroll

There is an alternative to QuickBooks Payroll Subscriptions, it's called "Manual Payroll".

Intuit recently announced that their most popular payroll subscriptions are going up in cost. This increase in cost will not only impact QuickBooks users, but also ProAdvisors who either provide payroll services directly to clients, or assist clients with QuickBooks Payroll. As QuickBooks payroll subscription prices rise, fewer small businesses may decide to move ahead with automating their payroll, they will simply hang-on to those paper tax tables they have been using for the last few years and continue with their manual ways of doing payroll.

While QuickBooks ProAdvisors’ spend a lot of time teaching our clients how to use QuickBooks Payroll services, of one type or another, not many of us even bother to let our clients know that there is an ‘old fashioned’ alternative to Intuit payroll offerings. While many small businesses want to automate payroll within their accounting, many cannot afford a payroll subscription, especially in light of other payroll related costs. This article is intended to insure that readers are aware that you can still prepare payroll manually inside of QuickBooks.

A large number of mom-n-pop businesses who are starting to grow have been preparing payroll for their few employees using the old fashioned method of looking up tax tables to process payroll deductions and then hand-write or type paychecks. While this may not be the best approach it is still an alternative; however, QuickBooks stopped featuring this ‘built-in’ functionality years ago in favor of promoting payroll subscriptions. But while ‘manual payroll’ is not simply a select it option in the payroll preferences it is still and option both you and your clients should be aware of.

If a client doesn’t want to subscribe to a QuickBooks Payroll subscription, their QuickBooks can still be set-up to allow them to process manual payroll. To turn on ‘manual payroll’:

Step 1 - Click Help on the QuickBooks bar, the select QuickBooks Help.

Step 4 - Help opens the topic window, read the information thoroughly, including the disclosure where Intuit is telling you that if you use manual payroll processing they assume no liability for any improper calculations. [Note: if you have been preparing payroll from tax tables since your first employee you were already assuming all the liability for doing so.]

Step 5 - Near the end of the displayed information, you will find a one sentence paragraph that reads “Set your company file to use the manual payroll calculations setting.”

Click on the words manual payroll calculations (this links you to yet another Help window).

Step 6 - This new help-window displays an additional message asking “are you sure you want to set your company file to use manual calculations?” There is some more verbiage on the screen that is intended to make you think twice about not subscribing to an Intuit Payroll Service.

At the very bottom of this window you will see, click here: Set my company file to use manual calculations. If you wish to continue you must click on those words to proceed.

Step 7 - QuickBooks then displays the message shown in the title of this article. “You must now calculate and enter your paycheck amounts manually. If you currently have an active QuickBooks Payroll Service Subscription, you must call the Intuit Payroll Service to cancel your subscription and avoid future charges.” (Once again it seems to be all about payroll subscription revenues.)

Step 8 - Manual payroll processing is now active. You will find that ‘Payroll items’ have been added to the List Menu, and you have access to the same type of payroll item functionality that payroll subscription users make use of, with the exception that all ‘figures’ such as tax rates must be entered by you.

Step 9 - Payroll checks and other payroll functionality that had been turned off in your QuickBooks file are now available.

Step 10 - You can set-up your payroll items, employees and process payroll and payroll taxes in exactly the same way you would if you had a payroll subscription with one exception, you must calculate all taxes manually (using either manual tax tables or tax formulas).

In some cases payroll tax items will generally remain constant, such as the rate for Medicare and Social Security. (Check you tax tables for current rates.)

In other cases you will need to ‘compute’ (with paper tax tables or formulas) the tax to be applied when processing the paycheck, such as Federal Withholding.

Step 11 - Just remember you are on your own, exactly like you were when you hand wrote paychecks with the only difference being that QuickBooks is posting and tracking the data you enter.

Step 12 - Unfortunately you cannot prepare or print payroll tax forms using ‘manual payroll’; however, you can easily find the information, within QuickBooks Payroll reports, you need to prepare those filings manually or enter in an on-line reporting system such as EFTPS (Electronic Federal Tax Payment System).

It is hard to truly judge the value of the manual payroll option over a subscription; for larger businesses one can expect that a payroll subscription will almost certainly be more cost effective than the task of having to use tax table look-up for each payroll as required by this process. On the other hand, for a small one or two man shop, this option may just be the alternative that their small business needs, especially if their paychecks tend to remain constant from one pay period to the next. In these cases you as a QuickBooks ProAdvisor can provide a meaningful service to your client by insuring that they are aware of this "manual payroll" alternative which remains as "hush hush" as QuickBooks can keep it.

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Comments (23)

Don't See Manual Payment Option under Help

I am considering switching from Quickbooks Intuit Payroll Svces to Manual Payroll. When I go to Quickbooks Help and then type in Calculate Manual Payroll I don't even see any type option to select. Could it be that I am still a customer of the Intuit System?

Connie16 days ago

Make sure all payroll subscription information is removed.

You can't switch to manual payroll if you have a payroll subscription tied to your QuickBooks file even if that subscription is inactive.

insightfulaccountant.com16 days ago

it didn't work

i followed your instructions and after clicking on set my company file to use manaul calculations i do not find payroll items when i click on list. i am using quickbooks pro 2014. any suggestions? thanks.

ron108 days ago

Sorry you are having problems but it should work.

I just went through the steps with a brand new company file and it worked perfectly, so I must assume that you either missed a step, or didn't respond appropriately at one or more of the steps.

I would recommend that you try going back through the steps again.

insightfulaccountant.com108 days ago

Thank you!

Wow, an update just wiped out my payroll capabilities. I felt like QuickBooks was holding me hostage. I searched and searched for answers to return to my previous status. then I thought to look for a work around. Thank you! You changed my panic to JOY!

Ruth Campbell202 days ago

I think they've changed...

We're just moving to QB 2016 and will be turning on the full payroll service in January. The amount for the enhanced service is $22.75 + 2 per employee if billed annually, which is about 1100 a year. I know that seems like a lot, but we're currently paying ADP more than twice that. They bill us every pay period about $130-140! And that doesn't even include processing W2's at the end of the year. We're using the manual portion of payroll in QB right now, and so far so good.

Bridgettmore than 1 year ago

Thank you so much!

I was at the end of my rope! I am the bookkeeper for my church, and manual payroll calculations have served us well for years. We recently made the decision to change our fiscal year, so I set up a new company to use going forward. I exported/imported the chart of accounts and vendors, but the whole payroll section had me stumped! I could not see the Payroll Item List, and the entire Employee section on my new home page was blank. I checked everything I could think of between the old and new companies, and everything matched. I didn't know where else to look, so you can imagine how relieved I was to find this article! The directions matched word for word, and it worked! I have what I need to continue. Thank you for your time in making these steps known and available to the user community!

Elainemore than 2 years ago

Thanks

Thanks for the information since QB went to the cloud it is ridiculously expensive!

Christymore than 2 years ago

Manually Calculate in Excel, suggestions

Hi, thanks for this article. I have been using Excel for years to manually calculate my taxes, which I then enter into QB. Do you have any suggestions for existing free Excel payroll calculator templates or something similar? My spreadsheet isn't the most efficient, but it does calculate everything I need as well as create reports for monthly liability taxes, 941 quarterly taxes and w-2's (I use these reports to compare to QB to make sure that I haven't missed anything). Thanks again!

Juliamore than 2 years ago

thank you for this!

We upgraded Quickbooks and suddenly our manual payroll was gone. Thank you for this article. There was no need to pay for payroll. It's a shame that Quickbooks doesn't make this easier to turn on and off.

Sarahmore than 2 years ago

QuickBooks Payroll

I was glad to come across this article, especially since I just received notice that my payroll tax subscription has gone up this year to $469!! I do payroll for a church with only 3 employees. This is such a ripoff. Neither my church nor myself can continue to pay such prices. I will be trying out manual payroll thanks to this article.

Evelyn Postellmore than 3 years ago

Quickbooks Payroll

I am very disappointed with the purchase of Quickbooks. I previously made my own spreadsheets for payroll. I do not want the service just a way to generate more concise reports. Impossible with Quickbooks. This program is out to punish the one who does not purchase the service. It doesn't work with manually entering payroll. I have spent an entire day wasting my time trying to get it to work - I am reverting back to my homemade spread sheets - easier, accurate, and I can generate what I want for a report. Sorry Quickbooks but you are not the program you think you are cracked up to be - again money is the game.

Janemore than 3 years ago

Quickbooks Payroll

Biggest Scam out there!! Charging for services that people don't use all of and not giving them any other options!! I love how you pay $350 a year and then they are adding on monthly fees for services you don't use!!

Jessicamore than 3 years ago

Manual Payroll

Unfortunately I have the same problem as the previous person. When I go to Help and type Manual Payroll then select "Calculating payroll taxes manually (without a subscription to QuickBooks Payroll)," there is no option on the end of the displayed information, where I can find a one sentence paragraph that reads “Set your company file to use the manual payroll calculations setting.” I use to have Payroll for 2012 but did it manually in Excel for 2013, then transfer the info to QuickBooks Premier. I did go to Preferences and turned on No Payroll feature. By the way this is Canadian Payroll.
I set up 2 Categories:
1. Payroll Liability with sub categories: CPP & EI for company and employee and federal tax.
2. Payroll Expenses with sub categories: CPP & EI for company, Hourly Wage and VacPay Accrued Expense
Any comment will help. Thanks

Polamore than 3 years ago

I wish I had an answer.....

This may be one of the differences between the Canadian version of QuickBooks and the US version, and I simply don't have a way of testing that since I have been unable, at least in past years, to have been unable to purchase a QBPA membership in Canada to obtain the products (for significantly less there than they charge us here).

insightfulaccountant.commore than 3 years ago

Manual Payroll

Do you have to have a lapsed/non active subscription before you get the option to switch to manual payroll? My sub is showing as still active, and when following step 1&2 above, do not get the "Calculating payroll taxes manually (without a subscription to QuickBooks Payroll)." option!

Danmore than 4 years ago

You can't have both a payroll subscription and manual payroll.

The two payroll configurations are 'exclusive' of each other.

insightfulaccountant.commore than 4 years ago

renew licence info

I turned off the payroll subscription but it would only stay off if I clicked on renew licence information, or sync licence information.

Murraymore than 2 years ago

Manual Payroll

I had to turn on Full Payoll in the Preferences before I could test this method in QB2013. Please comment.

Leslie Simmonsmore than 4 years ago

You are correct--

You must have payroll turned on under preferences to make use of any payroll functionality in QuickBooks. Because one consideration in writing this article at this time had to deal with recent price increases in QB Payroll products, we felt advising our readers of the fact that 'manual payroll' is still an alternative and most of them would already have payroll preferences activated.

manual payroll alternative

Thanks for the timely article. I had forgotten about manual payroll as an option. Payroll is scary enough to most of my clients here in the DC area and then being priced out of Enhanced Payroll will really exacerbate their frustration. Being able to offer an alternative to my clients - even tho its a step backwards in efficiency- is a good tool to have 'in my pocket.'

Leslie Simmonsmore than 4 years ago

One other alternative is to buy Enhanced Payroll free after rebate at Staples through 8/17

Another solution for businesses with 1-3 employees (which is a majority of my clients in Seattle that I set up, review, and train one-on-one including both Intuit and manual payroll) would be to buy Intuit's QuickBooks Enhanced Payroll (1 year subscription) at Staples, free after rebate through 08/17/13. You are responsible for any use or sales taxes. You can even order it online at http://t.co/NFn63jVyAq . Staples also has a rewards program that gives you 5% back.

Keith Gormezanomore than 4 years ago

Thanks for posting the 'sale information'...

Keith - thanks for posting about the 'sale' currently going on at Staples (I must admit I had not seen it). Of course when the sale is over, there will still be QB users looking for an alternative to buying a subscription, and that is where 'manual payroll' may come in for some users.